The Geopolitics of Lithium: How the Energy Transition Is Rewriting Global Power Hierarchies

theconvergencys
Nov 20, 2025
4 min read

By Ishita Sharma Nov. 4, 2024

I – Introduction

For decades, oil defined geopolitics. Now, lithium — the soft, silvery metal that powers electric vehicle (EV) batteries and renewable storage systems — is becoming its 21st-century successor. The International Energy Agency (2025) estimates global lithium demand will grow over 420% by 2035, driven by electrification and climate commitments. As the world pivots from fossil fuels to clean energy, a new map of power is emerging — one that replaces petrostates with electrostates.

This paper examines how lithium reshapes global political and economic alignments, focusing on three axes of transformation: the rise of new resource powers, the strategic competition between the U.S. and China, and the risk of a green resource paradox where the pursuit of sustainability reproduces the extractive inequalities of the past century.

II – The New Resource Powers

Lithium reserves are geographically concentrated: Chile, Argentina, and Bolivia — the “Lithium Triangle” — hold nearly 60% of global reserves, while Australia produces over half of global supply (U.S. Geological Survey, 2025). This geographic clustering has turned previously peripheral economies into key players in the energy transition.

Bolivia, historically one of Latin America’s poorest nations, now controls the world’s largest untapped deposits. Through its state-owned company Yacimientos de Litio Bolivianos (YLB), it is negotiating joint ventures with Chinese and German firms to build processing plants domestically — a sharp departure from the raw-commodity export model that defined South American extractivism for decades.

Similarly, Namibia and the Democratic Republic of Congo are leveraging critical mineral reserves to attract green-industrial investment. Yet these nations face a historical dilemma: how to capture value from extraction without replicating the resource curse — overdependence, corruption, and environmental degradation. The African Development Bank (2024) warns that without strong governance, lithium extraction could deepen rather than reduce inequality, particularly if profits remain concentrated in foreign-owned firms.

III – The U.S.–China Energy Rivalry

The energy transition is increasingly defined by strategic decoupling between Washington and Beijing. China dominates every stage of the lithium value chain — controlling over 70% of global lithium-ion battery production and 80% of chemical refining capacity (BloombergNEF Battery Supply Chain Rankings, 2025).

In response, the United States and its allies have launched a wave of “friend-shoring” initiatives. The U.S. Inflation Reduction Act (2023) requires that 80% of EV battery components come from domestic or allied-country sources by 2027. The Minerals Security Partnership, led by the U.S., Japan, and the EU, aims to reduce reliance on Chinese supply chains by investing $18 billion in lithium projects across Latin America and Africa.

But the transition is far from smooth. These competing industrial strategies risk fragmenting global markets into competing blocs, much like Cold War oil politics. Beijing’s response — offering concessional loans and infrastructure development through the Belt and Road Initiative’s “Green Energy Corridor” — has expanded its influence in resource-rich but cash-poor regions. In 2025 alone, China signed new lithium agreements worth $11.4 billion in Africa and the Pacific.

The emerging reality is not energy independence but mutual vulnerability: while the West depends on Chinese processing, China relies on Western technology for advanced battery design. Energy security in the electric age is becoming relational, not absolute.

IV – The Green Resource Paradox

The global race for lithium highlights an uncomfortable contradiction: the transition to “clean” energy still depends on extractive industries with significant environmental and social costs. Lithium brine extraction in Chile’s Atacama Desert consumes 500,000 gallons of water per ton of lithium, threatening indigenous communities and fragile ecosystems (Environmental Science & Policy Journal, 2024).

Moreover, the price volatility of lithium undermines sustainable planning. After tripling between 2020 and 2023, prices fell by 45% in 2024 due to oversupply and speculative trading (S&P Global Commodity Insights, 2025). This boom-and-bust cycle discourages long-term investment in recycling and innovation. Without circular-economy policies, the renewable revolution risks reproducing the same exploitative logics that defined the fossil-fuel era.

Some nations are taking corrective steps. The European Union’s Critical Raw Materials Act (2025) mandates that by 2030, at least 25% of battery materials must come from recycled sources. Meanwhile, South Korea and Japan are investing heavily in lithium-recycling technologies projected to recover up to 90% of used material from EV batteries. These efforts represent the first attempt to move from extraction-based energy politics toward post-extractive industrialism.

V – Conclusion

Lithium is no longer a mere commodity; it is a geopolitical catalyst shaping the next world order. As energy transitions accelerate, control over this single element will determine who leads in clean technology, who profits from green capitalism, and who bears its social and ecological costs.

The challenge is clear: to prevent the “clean energy” revolution from becoming another chapter in global inequality. Building transparent, equitable lithium markets — with enforceable labor, environmental, and revenue-sharing standards — could ensure that the road to decarbonization does not mirror the colonial patterns of the oil age.

In the 20th century, nations fought over barrels; in the 21st, they compete over batteries. The outcome will define not only who powers the planet — but who owns the future.

Works Cited (MLA)

International Energy Agency Global Minerals Outlook 2025. IEA, 2025.
U.S. Geological Survey Mineral Commodity Summary: Lithium 2025. U.S. Department of the Interior, 2025.
BloombergNEF Battery Supply Chain Rankings 2025. BloombergNEF, 2025.
African Development Bank Annual Energy Report 2024. AfDB, 2024.
Inflation Reduction Act Implementation Brief. U.S. Department of Energy, 2024.
S&P Global Commodity Insights: Lithium Market Outlook 2025. S&P Global, 2025.
“Water and Extraction in the Atacama.” Environmental Science & Policy Journal, vol. 119, 2024, pp. 27–45.
Critical Raw Materials Act. European Commission, 2025.